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Inflation Forecasts in Canada Remain Negative

2/21/2023 12:05 PM

Against the poor macroeconomic data, the USD/CAD pair is declining, trading at 1.3474.

At the first meeting of this year, the Bank of Canada sharply reduced the pace of interest rate hikes to 25.0 basis points, which, in turn, affected the dynamics of inflation. According to analysts' forecasts, today's data may record an increase in the core indicator to 5.5% from 5.4% earlier due to insufficient deceleration of the monthly value by –0.3% instead of –0.6% a month earlier. The consumer price index in January is forecast to correct by 0.7% after falling 0.6% earlier, which will keep the annual rate above 6.0% at 6.1%.

In anticipation of the evening's report on the real estate market, the US dollar has stabilized at 103.800 in the USD Index. One of the reasons for keeping the currency at high levels, analysts call a positive forecast for sales in the secondary housing market, which assumes an increase in January by 2.0% to 4.10M from 4.02M in the previous period, which may be the first monthly increase in the indicator from February 2022.

On the daily chart, the trading instrument is moving within the global Triangle pattern with dynamically narrowing boundaries 1.3530–1.3310, rising towards the resistance line.

Technical indicators gave a signal to buy: the range of fluctuations of the EMA on the Alligator indicator began to expand upwards, and the AO histogram forms ascending bars, moving into the buy zone.

Resistance levels: 1.3540, 1.3700. | Support levels: 1.3330, 1.3120.

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